by Lisa Cyriacks

One of the biggest selling points for legalization of marijuana was the infusion of new tax revenue. Despite a steady stream of cannabis operations approvals over the past two years, Saguache County has yet to receive the windfall revenues anticipated on the 2016 ballot question approving a 5% excise tax.

The decision by Saguache County Commissioners to allow the grant of numerous applications for grows and dispensaries throughout the county proved to be a bit more controversial in 2018 than the Commissioners likely expected.

The second year of approvals brought many residents to Commissioner meetings. The heart of the debate for some residents is the question of how the County is spending revenue from excise taxes and licensure fees collected from the legal marijuana operations. The other concern is the Sheriff’s ability to address the illegal, black market side of marijuana and its distribution in Saguache County.

Many individuals cited multiple instances during Commissioner and Planning Commission meetings that they and their concerns were not being taken seriously.

In response, the Commissioners and the Sheriff’s office issued a joint statement outlining plans to hire additional employees for enforcement, and to step up efforts to shut down illegal grows and enforce state limits on plant counts.

The statement continues, “With the legalization of Cannabis in both our state and county we have seen stark changes to our landscape and population. We have seen the introduction of a new industry that brings the possibility of jobs and income to an area that has struggled with poverty.”

Every grower, as well as Commissioners themselves—during Commissioner meetings, Planning Commission meetings and special meetings—have constantly intoned the conviction that this cannabis boom is great for small businesses and the economy in the county.  The County budget itemization will tell county residents if this is so and to what extent.

Follow the money

From records requested from the Saguache County Land Use office, here is at least a preliminary accounting of the revenues from marijuana applications and operations located in Saguache County. Most of the excise tax is collected from about six cultivations.

# of New Applications : in 2017, 3. In 2018, 19

Marijuana Conditional Use Appl. Fees: 2017 – $67,644. 2018 – $52,429

Fees from State MJ Enforcement Division: 2017 – $57,500. 2018 – $35,000

In addition to these numbers, the Town of Moffat annexed almost 100 acres into the town for the purposed of encouraging marijuana businesses to locate within the town. This Commercial Cannabis Park, known as Area 420, has received approval for 16 commercial marijuana cultivations and marijuana-infused production facilities.

Moffat residents voted in the General Election of 2018 to approve a 5% tax on marijuana operations. With that vote, the ability of Saguache County to collect excise tax was negated.

The breakdown of how these funds have been spent by the County is not yet available.

According to the Saguache County Sheriff, Dan Warwick, there is one full-time code enforcement officer under the Land Use office. Deputy Wayne Clark, who fulfilled that role for most of 2018 is assisting on an “as-needed” basis. 

Statewide, the Department of Revenue is reporting record sales for January 2019: $124.9 million, 6% higher than January 2018. While retail sales have been booming, the wholesale prices for raw cannabis have seen a steep decline. These wholesale prices are the basis for the 5% excise tax imposed and collected by Saguache County.

Even in just two years, Saguache County has seen changes in the industry. So far, in 2019, there have been no applications for new cultivations or operations. Over the past several months, many of the applications reviewed by the County are for expanded operations, changes of ownership, name change, or modifications to business structure.

The number of retail marijuana stores has grown from one in Moffat in 2014 to two in the town of Moffat, and two in unincorporated Saguache County to make a total of four.

In 2018, only one application was denied. Two applicants decided to withdraw from operations completely, reasons undisclosed. A third withdrew his application after felony charges were filed by the Marijuana Enforcement Division in court due to misrepresentations on application.

To date in 2019, two cultivations have been transferred to new owners. One operation has opened its property to leasing land for cultivation to at least one other person, thus expanding operations.

Statewide, pot shops have sold over $6 billion worth of legal marijuana since retail sales began on January 1, 2014. For the fifth year in a row, annual dispensary sales reached a new record.

In May 2018, 3,101 licensed marijuana businesses were registered in Colorado. Nearly 70% of the licenses for marijuana businesses were concentrated in the counties of Denver (1,226), El Paso (370), Pueblo (303), and Boulder (216).

Total revenue from taxes, licenses, and fees increased from $67,594,325 in 2014 to $247,368,474 in 2017 (+266%). Excise tax revenue dedicated to school capital construction assistance was $40,000,000 in 2017 and an additional $27,752,968 was dedicated to the public school fund.

Illegal activity

According to a study prepared by the Colorado Division of Criminal Justice, “Impacts on Marijuana Legalization in Colorado” includes some jarring statistics about illegal activity, such as criminal cultivations on public land in Colorado and the amount of illegal marijuana seized from such operations. Over 10,350 pounds of illegal pot were seized by Colorado law enforcement in 2017, which is nearly double the 5,145 pounds seized in 2016.

Southern Colorado counties in particular struggle with illegal operations. Statewide arrests related to marijuana production increased by 51% from 2012 to 2017. 

Saguache County Sheriff Dan Warwick acknowledges that illegal operations still can be found countywide, “Black market marijuana is still lucrative. No matter how many permits are issued for legal operations, the black market will continue.”

Legalizing marijuana in Colorado was supposed to weaken the illegal market. A Rocky Mountain PBS “Insight with John Ferrugia” investigation shows just the opposite. In the years since Colorado legalized recreational marijuana in 2012, law enforcement all over the country have reported finding Colorado marijuana in their states where recreational use of the drug is not legal. For example, data compiled by the Colorado Department of Public Safety found that US postal inspectors seized more than 2,000 pounds of marijuana mailed from Colorado in 2017—compared to 262 pounds in 2014.

Rural areas with low-budget law enforcement offices are prime targets for most of these operations.

Link to “Cultivating Crime” RMPBS Insight with John Ferrugia

Link to Impacts of Marijuana Legalization on Colorado October 2018 report